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France Waives CICE Tax Credit Fee For SMEs

by Ulrika Lomas, Tax-News.com, Brussels

20 June 2013


The French Finance Ministry has announced plans to wave the EUR150 (USD201) pre-finance fee for the competitiveness and employment tax credit (CICE), for small businesses requesting an advance credit of up to EUR25,000.

Until now, all companies seeking CICE pre-finance have been required to pay the charge, which is intended to cover not only refinancing costs, but also administrative costs and the risk that a small proportion of businesses might fold before they are actually entitled to receive the tax credit.

Defending its decision, the Finance Ministry explains that the CICE pre-financing mechanism was initially designed to support medium-sized companies in France. The Ministry points out, however, that the measure has become increasingly popular with small- and medium-sized companies (SMEs), as well as with very small companies, noting that over half of all requests are for CICE pre-finance of below EUR25,000.

To guarantee that SMEs and very small enterprises are able to easily access the pre-finance, and to ensure that such firms are not deterred from using the mechanism by the fee, the Finance Ministry elected to waive the charge for the smallest amounts of CICE pre-finance.

Concluding, the Finance Ministry notes that, so far, 5,000 requests for pre-finance have either been approved or are in the process of being approved, for a total sum of EUR700m.

The CICE pre-finance mechanism aims to give immediate cash flow support to companies in France, by allowing banks to finance up to 85 percent of the CICE tax credit in advance. The scheme was made available to all companies in France, irrespective of their size, on April 5. Other companies will benefit from the CICE at the moment when payment of their corporation tax is due.

France's CICE amounts to a reduction in social contributions for corporations, and aims to give companies the means with which to improve their competitiveness and to support employment. The CICE tax credit amounts to 4 percent of gross payroll for remuneration equal to or below 2.5 times the minimum wage in 2013, rising to 6 percent in 2014. The rules are the same as for general reductions in social contributions and for the research tax credit with which companies are already familiar.

TAGS: Finance | tax | small business | business | corporation tax | payroll | France | tax breaks

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